The nearly $600 million payout to the two winners of this week's latest Powerball lottery drawing has inspired what Treasury Secretary Timothy Geithner called an ingenious and painless way out of the government's chronic debt crisis.

Geithner's ingenious and painless plan calls for the Federal Reserve to buy a minimum of $30 billion in Powerball tickets every week. Over the course of a year this would generate a minimum of $1.5 trillion in lottery winnings, Geithner calculated. As the holder of more than 99% of each week's outstanding tickets, the federal government would almost certainly win each week's jackpot. The cumulative weekly winnings would totally cover the annual budget deficits.

The Secretary congratulated himself for pioneering a truly innovative solution to government finance. It would completely bypass any need for

$30 billion will purchase 15 billion tickets. The odds are 175 million to one, thus insuring 85 payouts if all the possibilities are covered. If the game was not pari-mutual, with a sharing of the jackpot, the minimum jackpot of $40 million would be paid out 85 times, for a total of $3.4 billion. The loss would be $26.4 billion compared to the jackpots. Of course there would be ancilliary payouts of the powerball, 2 of a kind, 4 of a kind with PB, etc. These typically amount to 20 cents on the dollar, so let’s call it another $5.3 billion on the $26 billion remaining, for a total payback of $8.7 billion on an outlay of $30 billion.

That sounds about right. Close enough for government work, that is.
But it’s a lot worse than this, because the jackpots are, in fact, shared, and we haven’t even mentioned that the cash option is significantly discounted.

The Left tells us that the rich are rich because they have won the lottery of life. Now they want to join in. Of course, they are playing with other people’s money, but what the hell! Other people’s money goes down the same Rat hole.

14
posted on 12/05/2012 1:11:33 PM PST
by jonrick46
(The opium of Communists: other people's money.)

the federal government would almost certainly win each week's jackpot.

The Fed is not the same as the US Treasury. The US Treasury would have to be the one to buy the lottery tickets. They would have to get the money to do that by borrowing from the Fed. When they won, they would have to pay the Fed back with interest.

Not only that, but, PowerBall is drawn 2 times a week. If you started buying tickets, say, immediately after the last drawing, there would not be enough TIME to purchase 15 billion tickets. Further, there is no guarantee that you would win UNLESS you submitted 175 million tickets, covering every combination possibility. And, there probably isn’t even enough TIME to do THAT...

Not only that, but, PowerBall is drawn 2 times a week. If you started buying tickets, say, immediately after the last drawing, there would not be enough TIME to purchase 15 billion tickets
= = = = = = = = = = = = = = = = = = = = = = = = = = =
Back when the ‘lottos’ were basically 1 state per (I mean no multi state) some ‘genius’ (as is normal in a free society) figured he could hire enough people to buy the required # of tickets to cover every #...at that time there was only 1 drawing a week and multiple jackpots were very common.
‘They’ tweaked the system, went to 2 draws per week and it was virtually impossible to run all the numbers.
Since it was tweaked, the dual winners are rare where it was once common.

24
posted on 12/05/2012 2:25:12 PM PST
by xrmusn
(6/98 "It is virtually impossible to clean the pond as long as the pigs are still crapping in it")

You’re probably right but it’s clear to me that a lot of people don’t start playing until the jackpots are large (myself included).

In the most recent run, the jackpot didn’t grow faster than the $10M minimum until the 9th rollover. In the 15th rollover, the jackpot went from $325M to $587.5M.

So either the house wins (by playing its own game), or the jackpot rolls over, thereby attracting more players....I guess I’d try it on a smaller scale than $30B per round. Also I am conflating the federal government with the state governments.

What I’ve wondered....instead of putting current bets into the current jackpot, why not put current bets into the next jackpot? (As I understand it, they do some of that but not much).

I figure around 285M played the last round of the last big jackpot, and 30M played the Power Play. That put $332M into the prize pool.

About $132M was paid out on non-jackpot prizes.

So wouldn’t it be better to start the next jackpot at $200M rather than $40M? The $200M jackpot would already be funded, unlike the $40M jackpot.

Now yes, fewer people would play if the jackpot had been advertised at $325M the whole way rather than starting at $425M and then winding up at $550M, with the eventual jackpot being $587.5M.

It looks like around 14M played the 1st round of the next jackpot, with an additional 3.5M playing the Power Play, with $9.5M paid out in nonjackpot prizes.

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